Prime Minister Ehud Olmert sat comfortably behind his desk at his official residence in Jerusalem looking refreshed and seeming buoyant. He had recently met in the same room with Palestinian Authority President Mahmoud Abbas and was in a good mood - less sarcastic than he can be, less fidgety than is sometimes his wont.

Prime Minister Ehud Olmert talks to the Post.
Photo: Ariel Jerozolimski

Of Abbas he spoke pleasantly: Olmert said the PA leader genuinely wanted peace and that in his heart of hearts he recognized Israel as a Jewish state. In fact, the prime minister had warm things to say about all those whom he mentioned by name during the course of the hour-plus interview: Russian President Vladimir Putin, Egyptian President Hosni Mubarak, Jordanian King Abdullah II and US President George W. Bush.

Especially Bush. Two large photos of Olmert and Bush grace the prime minister's study: one with Olmert's hand on the president's shoulder, and the other of the two of them strolling, apparently engrossed in deep conversation. Olmert is proud of those pictures; he mentioned them twice; they reflect the relationship he has cultivated with Bush.

"President Bush is a giant friend of ours," Olmert said. "One of his most senior aides said that... he doesn't know of another relationship with similar intimacy, a bond of souls, as that between Israel and the United States."

Even though Olmert has made clear he would be willing to make deep concessions to the Palestinians - and noted in this interview that even Israel's best friends see a future in which Israel ultimately won't be much larger than the 1967 lines - few people actually believe that Olmert and Abbas will reach an agreement by the end of this year. But, while some speculate that Olmert wants to drag out negotiations until after the US elections in November to see who will be the next US president, Olmert argued the exact opposite.

He said that if an agreement is to be signed with the Palestinians, it is preferable to negotiate it with Bush in the White House, and with a supporting cast of friends in key capitals around the world - like Nicolas Sarkozy in Paris, Angela Merkel in Berlin and Gordon Brown in London. Throw the Quartet's envoy Tony Blair into the mix, and what you have, in Olmert's view, is almost "the hand of God."

That's an interesting description, all the more so since, following the Second Lebanon War in 2006, the conventional wisdom was that it would take nothing less than divine providence to keep Olmert in office at the end of 2007.

The past year was one during which he faced the damning interim report of the Winograd Committee, unparalleled low poll numbers, a number of scandals and a fragile coalition that rests on the support of two parties, Shas and Israel Beiteinu, whose ideologies run counter to what Olmert says must be done ultimately with the Palestinians: separate by making deep concessions based largely along the 1967 lines.

But survive Olmert did. And in the world according to the prime minister, his government - judging by the ease with which it passed the 2008 budget - is effective and stable; most Palestinians understand that there will be no "right of return"; a majority of Israelis will support an agreement he thinks is fitting; the Russians are not Israel's enemies; the Syrians should prove themselves as potential peace partners and may do so; and as far as the Iranians are concerned, "Israel is a strong state and it has the capacity and the will to prevent a circumstance in which it will stand in existential danger."

In this interview, on the occasion of the new calendar year, Olmert looked forward with neither boundless euphoria nor deep gloom to the challenges facing the country. But he looked forward as prime minister, preparing to host a first Bush presidential visit, and with relative confidence about retaining his post for a while. Few people a year ago would have bet on that.

You've said several times that it is vital to Israel that we reach a two-state solution. Can you elaborate? You've even been quoted saying the country is finished if that can't be achieved.
I never said exactly that, and I've also stressed publicly that I never used those words. Sometimes it happens in newspapers, not yours of course, that a half sentence is taken from the beginning, and a half sentence from the end, and everything is lost in the middle.

I said that if the solution of two states for two peoples is not realized - and Israel will have to deal with a reality of one state for two peoples - that this could bring about the end of the existence of Israel as a Jewish state. That is a danger one cannot deny; it exists, and is even realistic...

There is a picture over there (Olmert points to a black-and-white photograph at the side of his office) of my parents at a young age, taken in 1930. They were born in Russia, in the Ukraine, but went to China in 1917 when the Jews fled from the Russian Revolution. In the world of 1930, the end of the '20s, when there was no CNN, no digital world, no satellites and no communications that crossed continents, mountains and oceans in a flash, the Zionist idea [nonetheless] seeped to the end of the world, to northern China, and reached the Jewish community in Harbin and conquered the hearts of my parents. They immigrated to Israel in 1933, and they immigrated - this I know from them - to live in a Jewish democratic state.

It was inconceivable to them that in their son's generation there would be a threat to the very Jewishness of the State of Israel... [to] the nature, character and purpose of the State of Israel as a Jewish state.

We must provide an answer to that question. We cannot ignore it. Can Israel continue to hold on to the territories from the Jordan to the sea, [with] a non-Jewish population that even now is approaching the number of Jews in Israel, and taking into consideration that, with the reproduction rate, the [Arab population] can surpass [the Jewish population] in 20 or 30 years?

What will be if we don't want to separate? Will we live eternally in a confused reality where 50 percent of the population or more are residents but not equal citizens who have the right to vote like us? The moment that happens, the threat [to Israel's Jewish democratic character] is likely to be realized. My job as prime minister, more than anything else, is to ensure that doesn't happen.